Good morning. We’ve seen a decent spike in GBP/EUR rates over the last 24 hours rising from €1.16 to €1.1750 which is the level we were at around a week ago:
Why have Pound/Euro rates gone up?
It was due to comments made late yesterday by Kristin Forbes, one of the Bank of England’s Monetary Policy Committee’s rate setters. She said that as there are no signs of the economy slowing, and with inflation rising, interest rates may need to rise soon. This caused the Pound to rise against the Euro and other currencies as you can see in the chart above.
She also said that Brexit negotiations would likely drive moves in the Pound, and with Article 50 only a month away, there are risks the rate may drop off again as has been the recent trend.
If you look at the graphs over the last 3 to 6 months or so, you will see that GBP/EUR has been following a trend where it gets to these sort of levels, before dropping back away again due to uncertainty over Brexit. There’s no way to know if this trend will be repeated again of course, but given we have seen a rise of nearly 4% from 1.13 to 1.1750 in the last 3 weeks, if you need to buy Euros at the best rates it is certainly worth considering fixing a rate while these rates are available. Buying €250,000.000 at today’s rate is saving you more than £8000.00 compared to 3 weeks go.
If you need Euros later in the year, you can still lock in the current rate using a ‘Forward Contract’. This allows you to reserve the rate but you only have to lodge 10% of the total you want to convert, with the remainder not payable until you want the Euros. It’s a great tool for budgeting for property purchases abroad and protects you against the rate falling again.